Maldives: Developing a Legal, Policy and Operational Framework for the Sovereign Development Fund

In their effort to strengthen fiscal management, the authorities in the Maldives are aiming to develop a legal framework for the country’s Sovereign Development Fund (SDF) to provide it a firm legal basis and establish its governance, accountability, and reporting arrangements.
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Volume/Issue: Volume 2023 Issue 009
Publication date: August 2023
ISBN: 9798400251917
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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Money and Monetary Policy , International - Economics , Sovereign Wealth Funds , Debt Management , Public Financial Management , Legal Frameworks

Summary

This High-Level Summary technical assistance report focuses on developing a legal, policy and operational framework for the sovereign development fund (SDF) in Maldives. Until the fiscal situation in Maldives improves, the SDF could continue to usefully serve the twin objectives of external debt repayment and credit enhancement. It has helped boost investor confidence, enabling Maldives continued access to international financial markets, and come in handy for liquidity management during the pandemic. Decisions are required on the size of the SDF, the treatment of any excess inflows, and the application of the Fund’s balance upon its liquidation. While the fund size of a sinking fund would correspond to the underlying debt, a credit enhancement objective would consider a combination of factors, such as market conditions, credit standing, liabilities covered by the fund, and the medium-term debt strategy. A strong governance framework would enhance the legitimacy, performance, and accountability of the IMF.